Agricultural International Trade Negotiations: briefing by Department

Meeting report

AGRICULTURE AND LAND AFFAIRS PORTFOLIO COMMITTEE
22 February 2005
AGRICULTURE INTERNATIONAL TRADE NEGOTIATIONS: DEPARTMENT BRIEFING

Chairperson:

Department briefing: International Relations in Agriculture
Department briefing: Agricultural Trade Negotiations

SUMMARY
The Department of Agriculture briefed the Committee on South Africa’s international relations in agriculture and on the trade negotiations in which it was engaged. The Committee was given insight into South Africa’s agricultural strategy and how it represented South Africa’s agriculture interests in the global market. Much of the strategy’s focus however remained on the development of Africa and achieving regional prosperity whilst fostering South Africa interests. The Committee was given a breakdown of South Africa’s trading activities with specifics on import and export figures. The Department consulted with the Agricultural Trade Forum, NEDLAC and the South African Customs Union negotiating forum with regard to trade negotiations. The Department concluded by listing the trade agreements and negotiations that South Africa was party to.

Questions dealt with human resource capacity, the EU’s strict technical standards, subsidies in developed countries, review of trade agreements and maize imports and exports.

MINUTES
The briefing was presented by the Ms B Njobe, Director-General: Department of Agriculture; Ms G Van Dijk, Senior Manager for International Trade, Ms V Titi, Deputy Director General for Programme Planning, Monitoring and Evaluation, and Ms J Josephs, Senior Manager for International Relations.

Agricultural strategy
Ms Njobe commenced the first leg of the briefing with an extensive overview of South Africa’s international relations on agriculture. Background detail was provided about the development of an agricultural strategy and the potential threats and opportunities that had surfaced in the process. The aim of the strategy was to represent South Africa’s agriculture interests through the development and consolidation of bilateral relations and engagement in multilateral institutions. The aim would be realised via trade, technology, training etc. The values and principles underlying the strategy would be a focus on development, a focus on Africa and achieving regional prosperity in South Africa’s interests.

Ms Njobe also provided detail on South Africa’s multilateral and bilateral engagement. Specific mention was made of the African Agricultural Development Programme (AADP). The key areas of focus being the development of sanitary phyto sanitary (SPS) legislation, the development of National Regulatory Systems Infrastructure, the development of integrated food security strategies, disease combating and management in addition to setting up a micro-financing infrastructure for agriculture. Europe, the Americas and Australia were identified as major focus areas for trade. Mention was also made of a South-South co-operation, this included trade co-operation with Latin America and Asia.

Ms Njobe concluded by highlighting some of the challenges faced by the Department. The financing of the AADP, the limited human resources capacity to deal with bilateral and multilateral engagements and the availability of credible information for planning were amongst those highlighted.

Agricultural Trade negotiations
Ms Van Dijk provided detail on South Africa’s trade negotiations. A breakdown was given of South Africa’s imports and exports. The European Union was by far South Africa’s largest trading partner for both imports and exports (see presentation document). Ms Van Dijk noted that a total of 40% of South Africa’s production was being exported. However its primary (unprocessed) exports were much greater than its processed exports. The financial benefit to South Africa would have been much greater had it been the other way around. South Africa’s agricultural trade strategy had many factors that impacted upon it. Unfair competition, consumer concerns, intellectual property, technical standards, animal welfare and the environment were amongst those mentioned. More effective market intelligence, increased exports of value added products and less government intervention (that is, no more fixed prices) were cited as ways of improving South Africa’s agricultural strategy.

Ms Van Dijk noted that having clear objectives, reliable information and research, undertaking reconnaissance visits and consulting with the Agricultural Trade Forum (ATF) and the South Africa Customs Union (SACU) was essential in developing trade negotiating positions. The ATF, NEDLAC and the SACU negotiating forum were identified as structures eith which the Department consulted. Interactions with the Southern African Development Community (SADC) were also common. Ms Van Dijk concluded the briefing by giving the Committee a brief breakdown of various trade agreements and negotiations that South Africa was engaged in.

Discussion
Mr J Bici (UDM) referred to the challenges highlighted by the Director-General and asked if timeframes or targets had been set to overcome them. He accepted the fact that the EU was the biggest destination for South Africa’s exports but nevertheless asked what was being done to change the trend. Mr Bici referred to the South Africa Trade Strategy and asked what could be done to overcome unfair competition. Further, how would less government intervention improve South Africa’s agricultural strategy?

Ms Titi replied that some challenges were being overcome. She pointed out that R3 million had been set aside for the AADP. Treasury had been requested to approve a mechanism that would allow for funding for the AADP to be obtained from external sources i.e. donor funding. They were addressing shortfalls in human resource capacities in order to cope with the extensive multilateral and bilateral engagements. Ms Josephs added that attempts were being made to strengthen the multilateral approach. One of the ways could be to cluster similar agreements together if the objectives were the same. Ms Van Dijk agreed the EU had been the largest importer of South Africa goods. The UK was the destination for most of these. The Director-General said that attempts were being made to increase exports to China and India as well. Unfair competition could be dealt with in various ways. One way would be to eliminate export subsidies. Ms Van Dijk explained that when an economy moves from a controlled to a free market model, a decrease in government intervention was expected. The decrease in government intervention did not mean a decrease in support but rather a change in the type of support that was given.

Dr E Schoeman (ANC) said that the African Union often relied on South Africa in leading the way on science. There had been criticism over the seeming decrease in capacity at South Africa’s scientific institutes. Would South Africa be able to meet the challenge of its expected leadership in science in Africa? Dr Schoeman felt that the EU implemented strict technical standards when it suited them. He saw it as a ploy to prevent free and fair trade, especially when South Africa was aiming to expand its trade.

Ms Josephs pointed out that NEPAD had created incentives for the creation of centres of excellence. The Director-General said that she was the vice-chairperson of the Forum for Agricultural Research and that key strategic programmes were in place to build African research capacity. Methods of how to harness science and technology research in Africa had been considered. The idea was to attract scientists back to Africa. Experienced African scientists needed to assist with the capacity building process. Many African countries however lacked the institutional capacity that was required. The Director-General agreed that the EU often used its collective strength to shift "the goal posts" on its trade agenda. Ms Njobe emphasised that it was time that African countries needed to challenge the quality standards set by the EU.

Mr Z Kotwal (ANC) referred to South Africa’s agricultural trade strategy and asked what attempts were made to improve upon imports and exports in Africa.

Ms Van Dijk replied that there had been an increase in the export of processed goods from South Africa but the same could not be said for Africa as a whole. Enhancing inter-Africa trade was part of South Africa’s trade strategy.

Mr T Ramphele (ANC) referred to the issue of subsidies in developed countries and asked the Department to provide detail on them especially how it impacted upon farmers. Much had been said about international relations but to what extent were African professionals such as lawyers involved in the process?

The Director-General noted that the Department had strengthened the legal part of their unit. Having the proper legal capacity was the ultimate aim.

Mr B Radebe (ANC) referred to the linking of international relations to economic interest and asked why the World Food Programme (WFP) had not in 2004 bought wheat locally from South Africa farmers for distribution in Zimbabwe - even though the funds had been provided by South Africa. The wheat had in fact been purchased in the US. He also asked whether bilaterals and multilaterals did not stretch resources to the limit.

The Director-General noted that the WFP had in fact sourced its famine relief stocks from the US even though it was to be utilised in Africa. Ms Njobe said that South Africa had made a contribution of R100 million towards the WFP and had insisted on having a say on where the monies were to be spent. After much engagement maize that was to be distributed to Zimbabwe, Zambia and Malawi was ultimately bought in South Africa. The Department continued to engage with the WFO over the need to change its approach. It was agreed that 70% of South Africa’s contributions would be spent on re-introducing production capacity within the SADC region and that the remaining 30% would be spent on maize. Ms Josephs added that it was the first time with the exception of the US that a country had engaged with the WFO in this manner. She said that multilaterals and bilaterals were mutually reinforcing agreements and that it was not stretching South Africa’s resources.

Mr N Van Rooyen (NCOP) asked for an indication of the number of vacancies that the Department had at present.

Ms Josephs noted that the Department had initially had five vacancies but had created a further seven when requested by the Minister to identify its capacity requirements. There were thus twelve vacancies in total.

Mr Ngema asked why the exploration of technology and technical assistance with Europe, the Americas and Australia was going so slowly. Was the co-operative with Italy only an agricultural one?

Ms Josephs pointed out that the demand in Africa for engagement was so great that it was difficult to cope. Slow as it may seem international agreements were extremely useful. She confirmed that the co-operative with Italy was indeed of an agricultural nature.

Mr Bici asked whether the various sectors of the ATF were able to interact harmoniously. He also asked why the South Africa-EU Trade Agreement was only to be reviewed in 2005 when it had been implemented in January 2000 already. Did rules for reviewing agreements exist? He referred to the SACU-US Trade Negotiations and asked why the process had not been completed in November 2004.

Ms Josephs noted that agreements often contain clauses that allowed it to be reviewed or amended. The same applied to trade agreements. Ms Van Dijk said that the SACU-US Trade Negotiations had not been completed in November 2004 due to the US elections and the reshuffling of its government.

Mr Ramphele asked what the Department was doing about slowing down the trend of multinationals buying out small farmers. He mentioned the fact that it was accepted that 10% of a country’s budget should be used for agriculture. Did South Africa comply with the requirement?

Ms Titi explained that the 10% figure was to be achieved by countries incrementally on an annual basis. South Africa had spent R300 billion on agriculture but she was unsure of the percentage in relation to the budget. The Director-General shed light on the matter and said that that South Africa only spent one percent of its budget on agriculture. Ms Njobe stated that Sierra Leone spent fourteen percent of its budget on agriculture and the aim was to increase it even further.

Mr Schoeman noted that allegations had surfaced that maize imported from the US had been mixed with local maize.

Ms Van Dijk noted that there were standards that imported products had to comply with. The Director-General said that she was aware that wheat was imported from the US but was not aware that it was of an inferior quality. She agreed to look into the matter.

A question was asked about the growth of South Africa supermarkets in Africa and how it would affect South Africa’s agricultural strategy.

The Director-General replied that the quick expansion of South Africa supermarkets into Africa had taken everyone by surprise. She noted that it was an issue that needed engaging in.

The Chair asked the Department to provide the Committee with a detailed list of agreements that they were engaged in. The Department agreed to comply with the request.

The Chair on behalf of the Committee bid farewell to the Director-General as her term of office had expired. A farewell lunch had been prepared in her honour.

The meeting was adjourned.